KUALA LUMPUR: The Bank of East Asia Ltd has acquired nearly one million shares in Affin Holdings Bhd in the last three weeks, according to announcements on Bursa Malaysia.

According to Bursa, Bank of East Asia (BEA) has 318.55 million shares in Affin with its latest purchase into Malaysia’s second smallest bank by asset size.

Data on Bloomberg showed that BEA is the second largest shareholder of the banking group, with 21.26% or 317.73 million shares as at March 8, 2010.

The Hong Kong-based bank has been upping its stake consistently in Affin since it first became a substantial shareholder in June 2007.

“Perhaps Bank of East Asia feels Affin is good value,” said an analyst with a local research house who declined to be named.

“Affin’s non-performing loans (NPLs) have improved a lot in the last four to five quarters, and it is also one of the cheapest banking stocks around.”

Affin had said in April 2007 that it had obtained Bank Negara Malaysia’s (BNM) approval to negotiate with BEA on the proposed equity participation of not more than 25% equity interest in Affin.  

“Bank of East Asia originally had about a 4.9% stake in Affin,” said the analyst, adding that under the Banking and Financial Institutions Act 1989 (BAFIA), corporations’ stake in banks is capped at 20%.

According to its website, BEA is the largest independent local bank in Hong Kong, with total consolidated assets of HK$434.1 billion (RM185.8 billion) as of Dec 31, 2009.  According to Bloomberg, BEA’s largest shareholder is Spanish financial group Criteria Caixacorp SA with 14.98% equity interest followed by Tan Sri Quek Leng Chan’s Guoco Group Ltd with 8.03%. BEA operates 140 branches and centres in Hong Kong, and 70 outlets in China.

Affin closed flat at RM2.81 yesterday, with 245,100 shares done. It saw its 52-week high on March 8, 2010 at RM2.94 and its 52-week low on March 30, 2009 at RM1.27.

This article appeared in The Edge Financial Daily, March 23, 2010.